Protection of Posted Workers in the European Union: Findings and Policy Recommendations based on existing research

Transcription

1 Protection of Posted Workers in the European Union: Findings and Policy Recommendations based on existing research PROMO briefing paper Kairit Kall 1 PROMO Project Researcher, University of Jyväskylä Nathan Lillie PROMO Project Principle Investigator, University of Jyväskylä This publication has been written for the project Protecting Mobility through Improving Labour Rights Enforcement in Europe (PROMO), VS/2016/0222. It has received financial support from the European Union Programme for Employment and Social Innovation EaSI ( ). For further information please consult: The information contained in this publication reflects only the authors views and does not necessarily reflect the official position of the European Commission. The Commission is not responsible for any use that may be made of the information it contains. We are thankful to PROMO project partners and participants of the PROMO Helsinki workshop (23-24 May 2017) who provided feedback to this paper. We are especially thankful to Bettina Haidinger, Devi Sacchetto, Francesca Alice Vianello, Marek Čaněk, Jozef Pacolet and Fredriche de Wispelaere for their detailed comments and suggestions and to Markku Sippola for preparing PROMO project proposal. 1 Contact: kairit.kall@jyu.fi

2 Table of Contents 1. Executive summary Introduction European regulations on posting of workers Posting of Workers Directive (PWD) The Laval quartet The Enforcement Directive The number and impact of posting of workers The impact of European regulations of posting on different national systems and national responses to EU regulations Company practices, social dumping, regulatory caps and regime competition Enforcing the rights of posted workers The role of national authorities Liaibility arrangements Trade union strategies to represent posted workers and problems with representation Conclusions References

3 1. Executive summary Posting of workers has become a vehicle for labour mobility for millions of workers around the European Union (EU), and a standard way in which some sectors recruit labour. It is also a constant point of contention between those concerned about a race to the bottom on labour standards, and those who wish to promote unregulated labour markets. Some see it as just a trick to avoid national labour regulations, while others believe such views are disguised national protectionism. Our goal here is to sift through what is known about posting, and see what can be done to build a well-functioning system of labour protection, within the European framework of free movement. Without throwing away the benefits of an open European market in labour and service provision, how do we solve the serious worker protection problems which have emerged? The PROMO project 2 is based around a series of policy workshops/conferences in 2017 and 2018, encouraging discussion and dissemination of good practices for protection of posted workers. From the perspective of promoting good EU and national posted worker policies, the project aims to make recommendations to improve: national labour protection systems; institutions, practices and channels for promoting industrial democracy; collection of data relevant to making informed posted worker policy decisions. Our method is to take existing research knowledge, and improve on it through policy workshop discussions with experts and stakeholders. From these discussions, we will produce policy reports with well-grounded recommendations. For this first PROMO briefing paper, we have conducted an extensive survey of the research literature in industrial relations, political science, economics, legal studies, and sociology dealing with the issues related to the posting of workers after the EU Eastern enlargement in This paper was first distributed to all of the participants of the first PROMO workshop in Helsinki May 2017 who were given a possibility to comment on it. After the workshop the paper was modified according to the relevant feedback. This paper will first present possible policy and practices recommendations for improving the rights of posted workers, following a more detailed overview of research literature in the field. From the large body of literature we have identified six areas, in which there seems to be a consensus that policies and practices should be improved. These are: 1) Ensuring fair wage and other employment conditions for posted workers based on host country standards. 2) Ensuring that protections granted to posted workers in law are actually effectively accessible to the worker. 3) Building extensive cooperation between systems of worker protection, both between local/national actors and cross-border. 2 PROMO is organised by a consortium led by the University of Jyväskylä, Finland and including University of Padova, Italy, Multicultural Center Prague, Czech Republic, Fafo Institute for Labour and Social Research, Norway, SOLIDAR, Belgium, and Forschungs- und Beratungsstelle Arbeitswelt FORBA, Austria. See more: 3

4 4) Instituting effective and dissuasive sanctions against companies who cheat workers of pay, or who otherwise commit serious labour rights violations, or who fail to pay social security contributions or taxes. 5) Ensuring that posted workers have an effective and accessible right to join, be represented by and participate in trade unions, and lodge complaints in host country courts. 6) Collecting and making available more extensive, systematic and reliable data about posting of workers. 1. Ensuring fair wage and other employment conditions for posted workers based on host country standards Many studies have shown that rules and regulations applicable to posted workers have created regulatory caps and posting of workers can provide companies a competitive advantage through using regulatory arbitrage and/or regulatory evasion. To successfully fight unlawful posting practices, labour inspectorates and trade unions need more rights and resources. Especially after the Laval quarter judgments it has become clear that some national systems are better for protecting the rights of posted workers than others. For ensuring that posted workers are protected from extreme abuses, statutory minimum wages and/or generally applicable collective agreements play a key role in many contexts. The right to a collectively bargained wage should not depend on the host country having a system of legal extension of collective agreements. If it does, then Member States and trade unions should consider implementing legal extension systems. To guarantee wage-based non-discrimination of posted workers, statutory wages should cover different skill categories (and regions), so that posted workers would not only get minimum wages applicable. To close regulatory caps, countries should also extend posting regulations to all sectors. 2. Ensuring that protections granted to posted workers in law are actually effectively accessible to the worker In each country, the rules and regulations which apply to posted workers are different from those in other countries, and also different from those which apply to non-posted workers. Lack of knowledge about these (by posted workers and/or service providers) can lead to non-compliance with posting regulations. Posted workers should also have a possibility to consult relevant authorities about their rights. Good practices that can enhance the compliance with posting regulations are information centres directed to migrant/posted workers (preferably providing information in multiple languages), administered either by trade unions, other civil society organisations or state institutions. Trade unions actions (e.g. organising campaigns, distributions of information, mobilisation) towards posted workers also help to raise the workers awareness of their rights and to gain knowledge about local practices. State-administered web-pages and European-wide information sites have been put forth as a solution to the problem of lack of knowledge about relevant labour standards. So far, there is little evidence that these are effective. However, in the wake of the Enforcement Directive sites like the ECMIN 2.0 for the construction sector, administered by European Federation of Building and Woodworkers 3 and EURODETACHMENT resource centre 4, which are greatly improved over past efforts and offer relevant and constantly updated information in different languages, could make internet channels an important source of information for workers and employers (but also for other rights enforcing actors). It is also crucial that posted workers would be aware of places they could find information

5 3. Extending cooperation between systems of worker protection, both between local/national actors and cross-border Posting of workers is a complex phenomenon. Ensuring that the rights of posted workers are protected in practical situations requires comprehensive cooperation like joint visits to work sites of posted workers, enhanced information exchange of different national actors (depending on national system these can be inspectorates, other state bodies, and social partners). National actors also need more resources (such as training and finances) to deal with the complex phenomenon of posting. Moreover, posting of workers falls under both sending and receiving country regulations, but enforcers of the rights of posted workers (e.g. trade unions, labour inspectorates) are constrained by their national jurisdictions. In order to more effectively monitor and enforce the rights of posted workers, more extensive cross-border cooperation requiring additional resources is crucial. 4. Applying effective and dissuasive sanctions against companies who cheat workers of pay, or who otherwise commit serious labour rights violations, or who fail to pay social security contributions or taxes There is an epidemic of wage theft in the European Union, centred around worker posting. Many studies have shown that there are companies that violate posting rules and regulations in numerous ways. At the same time, labour inspectors lack the resources to control and combat the fraud effectively and transnational enforcement of fines is a long and complicated process, indicating that more resources, knowledge and transnational cooperation are necessary. The basic problem is twofold 1) enforcement is too weak, so the prospect of getting caught is small and 2) penalties are not punitive, so that getting caught leads only to a small fine, and paying the legally required wages and fees. For firms the clear rational choice is to try to get away with wage theft, and if caught simply pay what is required. Higher fines might help to force firms to comply with applicable regulations. Stricter liability schemes (like the German chain liability system) and soft measures (like making service recipient co-responsible for the violation of subcontractors through collective agreements) might help more effectively ensure the compliance of foreign service providers with applicable rules and regulations and ensure that posted workers will receive their earned wages. Rules on corporate registration should be changed to discourage letterbox companies. 5. Ensuring that posted workers have an effective and accessible right to join, be represented by and participate in trade unions (or works councils, where applicable), and lodge complaints in host country courts Posted workers generally do not join host country trade unions, and are often unwilling to share information about their wages and conditions (or even talk with anyone they think might be from the union). One reason seems to be because they are afraid, with good reason, that if employer finds out, they will get fired. In practice, there seem to be no repercussions to employers for dismissing posted workers for union activities or union membership. As a result, posted work is usually non-union work, and posted workers are effectively excluded from this well-established fundamental right of collective representation. Posted workers need better protection from unfair dismissal for union activities, and for registering complaints with authorities. Their well-justified fear of dismissal underlies many of the other problems with posted work regulation. They should also have practical access to host country s juridical system. The time needed for labour courts to handle posted worker cases should be shortened, and 5

6 possibilities for access improved including making them more affordable and available to workers who have to leave the country before a decision is made. The well-known Laval case even calls into question the right of posted workers to bargain collectively, in absence of extended generally applicable collective agreements or minimum wages. Works councilbased worker representation systems, such as exist in Germany, are problematic for posted workers, as the firm-centred nature of representation usually prevents them from having elected shop-floor representatives of their own, because they work in foreign subcontractors. Representation by main contractor s works councillors is often unavailable or problematic for them: shop steward based systems are less problematic in this respect. Works councillors should have legal rights to represent workers on the same sites at subcontractors, and they should be encouraged to do so when appropriate. 6. Collecting and making available more extensive, systematic and reliable data about posting of workers Accurate data is crucial for answering urgent questions about posting, in order to design good policies and effectively find posted workers and enforce their rights. Such data is scarce, mostly because appropriate systems have not been set up to collect it, but also because collecting the data is seen as a possible infringement on the free movement rights of firms. Although numerous qualitative studies about posting of workers have been conducted, the nature and volume of these is different between countries and sectors (e.g. construction sector is rather well studied; very few studies cover Eastern Europe as a receiving region). Case studies and other qualitative data collection suggest that posting of workers is most commonly used by firms seeking to avoid labour regulations, but there is almost certainly a bias toward studying the more problematic cases: there is a large amount of legitimate worker posting also occurring. We do not know how much of this occurs, or why, however, because we do not have the data. Quantitative studies are either based on national data, or have to cope with the inadequacies of using A1 Portable documents as a data source. Currently, the only comparative quantitative data source is based on the Portable Documents A1 that posted workers are required to obtain from their sending countries if they pay social contributions in another member state than the one they are posted to. This data source, however, provides only an indicative picture of the actual number of postings. The lack of adequate data hampers the possibility to get a proper picture of the phenomenon, and the possible economic and social benefits of this form of mobility which should be weighed against the regulatory challenges. Some countries have established mandatory registration systems for foreign service providers / posted workers, but these are not available everywhere, nor are they comparable across sectors and countries. We suggest that there is a need for improving the reliability and compatibility of administrative data collection across the EU, and also increasing the amount of information collected. Stricter registration rules (like notifications before service provisions, penalties for not following the rules, making service recipients co-responsible for registration) for service providers using posted workers could enhance the quality of information about postings and monitoring and enforcing the rights of posted workers. 6

7 2. Introduction Posting is a situation when a worker is sent abroad by his or her employer to work for a limited time, as part of an ongoing work relationship in the home country. This is in contrast to an intra-eu free movement of workers, where a worker moves abroad to search for or take up a job, but not as part of an ongoing work relationship. Legally, posting is based on the freedom of movement for services and establishment - i.e. on the right of the firms to move their employees between EU member states. Individual movement of workers, on the other hand, is based on the right of free movement of labour. This seemingly unimportant difference actually has important implications for the labour rights to which the worker in question has access - for posted workers, their rights derive in the first instance from sending country (usually, but not always, their home country); for individual free movers, their rights derive from the country in which the work is performed (Dølvik & Visser 2009). This means that posted workers are in a partial state of exception to the principles of territorial sovereignty, which have in the past governed labour regulations, through which worker safety, union representation, and social welfare have all been ensured (Lillie 2010). This situation of posted workers combines with the usual challenges that migrant workers have in protecting their labour rights and makes posted worker protection particularly challenging for unions and labour inspectorates. There is now widespread recognition among unions, researchers, and labour inspectors that systems of worker protection for posted workers in the Problems include an epidemic of wage theft, the growth of a European Union have serious grey economy of labour intermediaries, violations of trade inadequacies. Problems include an epidemic of wage theft, the growth union rights, and social security fraud. of a grey economy of labour intermediaries, violations of trade union rights, and social security fraud. Intra-EU labour mobility brings job opportunities to millions, but taking advantage of these opportunities can be a risky business for workers. The freedom of service provision, in addition to free movement of goods, people and capital are the four pillars of the single European market project. As argued by Mussche et al. (2016) shorter-term service mobility significantly contributes to creating the single market and it provides also advantages to mobile workers: to a certain extent they can circumvent linguistic, cultural, institutional and other problems that individual migrants might encounter. However, especially after the enlargement of the EU in 2004/07 posting of workers in the framework of free movement of services has become a controversial topic and has received considerable academic and political attention. Dølvik and Visser (2009) emphasise that European Union is facing a trilemma concerning its fundamental principles. The posting of workers brings about a conflict between the free movement of services and labour on the one hand, and basic social rights, in the form of non-discrimination and equal treatment of workers and the right of association and industrial action, on the other. The Laval quartet decisions by the Court of Justice of the European Union (see section 3.2) assert a supremacy of treaty-based free movement rights over trade union rights (ibid.). Not all worker postings are problematic. While posting as a political and labour rights problem has mostly been framed in terms of posting for labour cost advantage, which pits East vs. West (and to a lesser extent, South vs. North), this is only one aspect of the issue. Firstly, posting is not a new phenomenon and workers are posted both between old EU-15 and between EU-28 countries (Mussche et al. 2016). Secondly, a study conducted in 2010 across 12 countries showed that there are many kinds of posting arrangements with different motivations. These vary from so-called normal posting (i.e. the original 7

8 concept of posting), in which contactors provide temporary services generally well-paid skilled workers who belong to the posting companies core workforce in another European country, motivated by labour shortages or a search for know-how. On the other end of the spectrum, there are various fake posting arrangements, including recruiting workers who already reside in the host country as posted workers and turning de facto posted workers into bogusly self-employed or deducting different costs from posted workers pay. In between these extremes are companies who use posting as a way to avoid certain employment regulations in the host country, and who may sometimes violate labour regulations, but who basically offer real jobs for real pay (Cremers 2011a; 2011b; 2013). 8

9 3. European regulations on posting of workers Transnational employment in the European Union is regulated by the private international law, laid down in the Rome I Regulation, and internal market rules, specified by the Posted Workers Directive (van Hoek 2014). Before the enactment of the Posted Workers Directive (PWD) 5 posted workers were subject to the laws of their home country, even when they were temporary working in another EU/EEA country. For the development and longer description of the regulations concerning posting of workers, see Evju and Novitz (2014) Posting of Workers Directive (PWD) The directive 96/71/EC, i.e. the Posting of Workers Directive of 1996 sets the legal framework for crossborder labour mobility in the form of posting of workers. It establishes that in certain aspects posted workers are entitled to the statutory minimum conditions stipulated by law, regulation, administrative provision and/or by generally applicable collective agreements during the period they are posted to another member state, either home or host country ones, whichever is more favourable, irrespective of the law that applies to the employment contract (Cremers et al. 2007). PWD (Article 3(1)) regulates the terms and conditions guaranteed to the posted workers in the following categories: 1. Maximum work periods and minimum rest periods; 2. Minimum paid annual holidays; 3. The minimum rates of pay, including overtime rates; this point does not apply to supplementary occupational retirement pension schemes; 4. The conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings; 5. Health, safety and hygiene at work; 6. Protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, of children and of young people; and 7. Equality of treatment between men and women and other provisions on non-discrimination. The PWD, however, is implemented differently in the respective EU member states: in some it covers the whole economy, while in others it only covers certain sectors. In addition, the PWD does not give a clear definitions to concepts like posted worker, posting and the directive does not set the maximum duration for the posting. The directive (Article 2(1)) defines posted worker as a worker who, for a limited period, carries out his work in the territory of a Member State other than the State in which he normally works. This creates legal uncertainty, leaves room for manoeuvring for companies and makes it difficult for state authorities and social partners to check the genuine nature of posting (van Hoek & Houwerzijl 2012). A hotly debated issue has been the floor or ceiling character of the PWD: can social partners negotiate and establish higher rates of pay and better employment conditions for posted workers (as they do for local workers) or should posted workers be entitled to only the minimum host country provisions stipulated in the PWD. Following the adoption of the directive the widely held view was that it was a minimum directive, and countries were able to impose also other terms and conditions than the ones listed in the directive and set higher standards for posted workers than the mandatory minimum indicated in the Article 3 (1) (Evju & Novitz 2014: 60). After the so-called Laval quartet it became clear that according to the European Court of Justice (ECJ, since 2009 renamed the Court of Justice of the European Union, CJEU) the list of employment conditions stated in the PWD should be considered as a maximum 5 9

10 applicable for posted workers and the full range of employment benefits applicable to local workers, including individual migrants, cannot be mandated for posted workers (Lillie 2012). Related to that, one of the most problematic aspects in implementing the PWD has been securing host country minimum wages for posted workers. In the absence of statutory minimum wage or wages stipulated by the generally applicable collective agreements posted workers stay uncovered by the host country wage system. If trade unions try to secure better conditions for posted workers than the minimum ones stated in the law or generally applicable collective agreements, this might be considered as a restriction to the free movement of services. Currently the PWD is under revision and the new draft aims to provider stricter rules for posting and to make remuneration of posted workers more equal with local workers. The difficulty of implementing it relates to the fact that EU consists of 28 different labour law, tax regime and social security systems and their interaction creates loopholes. The second problems relates to different conflicting views on the necessity of the revision (Pancaldi, PROMO presentation 2017). While the proponents of the stricter regulations (mostly receiving countries, trade unions) argue that it would help to create a level playing field, take wages out of competition and help to combat social dumping, the opponents (mostly sending countries, some employers representatives) highlight that equal remuneration might render posting economically unviable, the Enforcement Directive should be first assessed (before making new changes) and the revision coincides with other measures limiting access to EU Internal Market (Bernaciak, PROMO presentation 2017) The Laval quartet In 2004 Latvian company Laval un Partneri Ltd (Laval 6 ) posted workers from Latvia to work in a Swedish construction sites. Local Swedish Building Workers Union started collective agreement negotiations with the company with the aim of extending sectoral level collective agreement also to the posted workers, but Laval instead signed an agreement with a Latvian union. As a reaction, Swedish Building Workers Union started a blockade at Laval building sites and Swedish Electricians Trade Union took secondary industrial action (both were lawful under Swedish law). Laval filed a lawsuit to the Swedish Labour Court with an aim to declare the industrial action unlawful. The Swedish Labour Court, however, denied the request and in 2005 sent the case to the CJEU. The CJEU s decision in 2007 declared that the industrial action by the Swedish unions was in breach of the freedom to provide services under Article 49 EC and with the hard nucleus defined in Article 3(1) of the PWD. The court deemed unions right to use industrial action in order to make a foreign company sign a collective agreement as discriminatory (see also Ahlberg et al. 2006; Davies 2008; Dølvik & Visser 2009; Eklund 2006; Joerges & Rödl 2009; Rönnmar 2010; Woolfson et al. 2010; 2014). Taking CJEU decision into account, the Swedish Labour Court returned to the Laval case and declared the industrial action illegal and the unions had to pay damages (Woolfson et al. 2010: 345). Later on both Sweden and Denmark (who have similar bargaining systems) amended their posting of workers acts and made unions right to take action against foreign employers more restrictive (Malmberg 2010: 8-9, see also section 5). Another case concerning the right to strike refers to the Finnish firm Viking 7 who owned a ferry that operated between Helsinki and Tallinn. Initially the ferry sailed under Finnish flag and had mainly Finnish crew. When the company wanted to register the ferry in Estonia and replace Finnish crew with an Estonian one (and opt out from the more expensive and restrictive Finnish industrial relations system), the International Transport Workers Federation (ITF, with headquarters in London) and ITF s affiliate, the 6 Case C-341/05, Laval un Partneri Ltd, ECR 2007, I Case C-438/05 Viking, ECR 2007, I

11 Finnish Seamen s Union (FSU), planned an industrial action against the re-flagging of the ferry and ITF advised its Estonian member union (Estonian seamen s) not to enter into collective agreement negotiations with Viking. Under the ITF s Athens Agreement between the seafaring union members of the ITF, (of which the Estonian Seaman s Independent Union is one) collective bargaining jurisdiction over a ship, regardless of flag, falls to the union from the country from which that ship is beneficially owned. Viking applied to the English Commercial Court, which was possible because the ITF is based in London, and obtained an injunction restraining the unions from industrial action, because the court found that the unions were in breach of Viking s right to freedom of establishment. The unions appealed to the Court of Appeal in the UK, which referred the case s decisive questions to the CJEU (see Davies 2008; Donaghey & Teague 2006; Joerges & Rödl 2009). The CJEU rulings established that trade unions industrial action could be restricted because it constrained firms enjoyment the EU s four freedoms. In the Viking case, the freedom in question was the freedom of establishment, as the unions demand to force Viking to abide by Finnish collective agreements made reflagging pointless, as the point of it was to The ECJ s Laval quartet decisions constrain the ways in which gain a cost advantage by EU governments and unions can protect posted workers. employing Estonian workers. However, CJEU also stated that Some see the decisions as putting firms free movement rights the policy to combat the use of above workers rights. flags of convenience could be under certain circumstances be interpreted as legitimate restriction to the right of freedom of establishment. In order to be interpreted as legitimate, the national courts had to decide that the industrial action was proportionate to protect workers employment conditions, jobs and/or be in the public interest (Lindstrom 2010: 1321). In 2008 CJEU decided on two more cases Rüffert 8 and Commission v Luxembourg 9 on the applicability of host country labour law to posted workers. Rüffert constrained the ability of governments to mandate labour and social conditions of workers at government contractors: as with Laval, the wages established could only be those in accordance with procedures provided in the PWD. These judgements also reinforced the norm that posted workers are only subject to a nucleus of mandatory rules of the minimum protection set in the PWD, but not to the whole regulation applicable to local workers, including terms and conditions set by the non-universally applicable collective agreements (Barnard 2009b; Blauberger 2014; Malmberg 2010). Based on the Laval quartet it can be concluded that in the cross-border situations (such as Laval and Viking cases) collective action might be considered as a restriction to the freedom of services and establishment. The Court has recognised that there exists a right to take collective action in EU law, but considered that this right must be balanced against the free movement rights of firms. The Viking and Laval judgments assert that the right to collective action is not uniform, but depends on the type and aim of the action. Unions have the right to use collective action if it is proportionate and aims to enforce minimum standards in accordance to the PWD (Davies 2008). Dorssemont (2011) argues that Viking and Laval judgments highlighted several clashes within the EU: firstly, a constitutional one between the 8 Case C-346/06 Rüffert, ECR 2008, I Case C-319/06, Commission v. Luxembourg, ECR 2008, I

12 domestic orders (of Sweden and Finland) and the legal order of the European Union (so-called fundamental economic freedoms), and secondly, the legal order of the EU on the one hand and the Council of Europe and the ILO (fundamental rights) on the other hand. The Laval quartet also established that PWD should be considered as Sähköliitto decision (2016), however, confirms that unions still a maximum/ceiling, not as a have some options to set higher standards. minimum directive. In CJEU s interpretation the Directive almost exhaustively describes the competences of EU countries in relation to posted workers, only exception can be in the case of public policy provisions, as stated in the Article 3(10) (Dølvik & Visser 2009; Malmberg 2010), although in the case Commission v. Luxembourg CJEU set very high threshold in order to be considered as such provisions (Barnard 2009b; Kilpatrick 2009c). CJEU s recent decision on the case Sähköalojen ammattiliitto ry v Elektrobudowa Spolka Akcyjna (C-396/13) about a Polish posted workers in Finland confirms that host country trade unions are able to claim for the local pay rates that depend on the skill level, and also holiday and overtime payments for posted workers, if these rates are established by a legally extended collective agreements (Cremers 2016; Lillie & Wagner 2015). Thus, according to the ruling all relevant elements of remuneration in Finland are applicable to posted workers (Hellsten, PROMO presentation 2017) The Enforcement Directive The Laval quartet decisions ( ) took the Posted Workers Directive, which many had considered a minimum directive or a floor for posted workers rights, and turned it into a maximum/ceiling for posted worker rights. The The long debated Enforcement Directive (Directive 2014/67/EU 10, to be transposed by June 2016) aims to improve the implementation and enforcement of PWD in practice by setting a framework of measures and control mechanism. It provides a non-exhaustive list of factual elements that should make it easier to determine the genuine establishment of the posting company and to evaluate if the worker is only temporarily working in another member state (Article 4). It establishes framework for improving access to information relevant for posting (Article 5) and for enhancing cooperation between countries (Articles 6 and 7). Furthermore, it gives a list of justified and proportionate administrative requirements and control measures that might be applied by the member states (Article 9) and establishes that member states have to ensure effective mechanisms for posted workers to The Enforcement Directive is intended to improve lodge complaints and institute enforcement of posted worker labour rights, but critics believe juridical or administrative proceedings (also through trade there are still loopholes. unions) against their employers also in the member state where they are posted (Article 11) and the possibility to apply subcontracting liability arrangements, although making compulsory only the application of joint and several liability in the construction sector (Article 12). The effectiveness of these measures, of course, depends on how they are interpreted and implemented in a concrete national context both legally and in

13 practice (Houwerzijl, PROMO presentation 2017). See also Cremers (2016: 160-1) for the possible shortcomings of the Enforcement Directive in guaranteeing the rights of posted workers and the enforcement of the PWD. 13

14 4. The number and impact of posting of workers Key to assessing the impact of posting and designing effective regulatory policies around it would be reliable posting statistics. We, however, lack accurate numerical information about posting, such as how many workers are posted, what industries are they posted in, what are their wages, and what the characteristics of the posted workers are. As a result, most studies about posting of workers are qualitative. This is also related to the focus of the studies (e.g., studies exploring posted workers working lives in depth require a qualitative approach), and to the aspect that posted workers are hard to reach via quantitative methods. The main (and only comparable European wide) quantitative data source about posting of workers are Portable Documents A1 (PD A1) that posted workers are required to obtain if they pay social contributions in another member state than the one they are posted to. This data source, however, provides only an indicative picture of the actual number of postings (Pacolet & De Wispelaere 2016) and researchers, enforcement agencies and trade unions have generally acknowledged that the lack of adequate data hampers the possibility to get a proper picture of the phenomenon (e.g. Dølvik & Visser 2009; Friberg et al. 2014; Thörnqvist & Woolfson 2012; Houwerzijl & van Hoek 2011). Out of the 2.05 million PDs A1 issued in 2015, 1.49 million were postings, i.e. issued to posted employed persons and posted self-employed persons 11 (Pacolet & De Wispelaere 2016: 14). The main sending member states of posted workers were Poland (251,107 PDs A1/postings; 16,8% of total postings), Germany (218,006 PDs A1/postings; 14,6%), France (130,468 PDs A1/postings; 8,7%) and Slovenia (126,153 PDs A1/postings; 8,4%) (ibid.: 18; 44). Main receiving countries of posted workers in 2015 were Germany (418,908 PDs A1/postings), France (177,674 PDs A1/postings), Belgium (156,556 PDs A1/postings) and Austria (108,627 PDs A1/postings) and the largest flows were from Poland to Germany (130,893 PDs A1/postings) and from Slovenia to Germany (60,976 PDs A1/postings) (ibid.: 18). Between 2010 and 2015 the number of postings has increased by 41,3% (ibid.: 22). Most PDs A1 were issued to posted workers employed in the construction sector (41,5%), followed by service sector (32,7%) and other industrial activities (25,4%) (ibid.: 25). Some member states (e.g. Austria, Belgium, Denmark, Finland, France, Luxembourg, the Netherlands) have also established national registration requirements for posted workers that provide an additional data on postings, although these databases have mostly not been utilised in research (notable exception being the Belgian LIMOSA register, see De Wispelaere & Pacolet 2017; Mussche et al. 2016). As systems for collecting data differ between countries, it is not possible (or at least not easy) to compare the data across countries. Based on the LIMOSA database, De Wispelaere & Pacolet (2017: 8-9) show that in 2015, the main transnational service provision countries in Belgium were the Netherlands (26,5%) and Poland (13,6%). While posted workers working for service providers from Poland, Portugal, Romania, 11 The number of A1 forms includes both posted employees as well as self-employed posted workers. However, the self-employed do not fall under the PWD. 14

15 Slovakia and Slovenia are mainly employed in the Belgian construction sector, workers working for service providers based on France and Germany are mainly posted to sectors other that the construction. In additions, significant amount of deemed a burden on employers. posted workers in the construction sector are selfemployed (e.g. 40% of Polish construction workers) and Belgian wages and working conditions are not applicable to this group of workers. The Belgian LIMOSA database has the most potential as a model for collecting useful data for policy and research; the data it can collect, however, has been restricted as it was The LIMOSA database includes also information about service providers outside EU/EEA and the nationality and place of residence of the posted workers. Posting of workers has become even more popular after Belgium lifted the restrictions to free movement of workers for the new member states. Posting is also used as a way to employ third country nationals, avoiding the need for a work permit in the host country. Instead, the workers have a work permit for the country they are posted from. In Belgium, the largest share of posted third country nationals (TCNs) in 2012 was Turkish, followed by Brazilians and Moroccans (Mussche et al. 2016: 13). Cases of TCNs being posted via an EU country to another EU country seem to be growing phenomena, and reports indicate these arrangements are often problematic from a labour rights perspective (Elonen, PROMO presentation 2017). Pacolet & De Wispelaere (2016: 29-31) have estimated the impact of posted workers on national labour markets based on PDs A1 (although data has limitations). They estimate that in ,4% of employment (or 0,24% as a full-time equivalent) in the EU could be related to the employment of posted workers. Especially affected as sending countries are Luxemburg, Slovenia, Croatia, Hungary and Estonia who post a considerable share of their workers. As receiving countries, most affected are Luxemburg, Belgium and Austria (especially in the construction sector). The construction sector in Switzerland, Germany, Sweden, the Netherlands and Finland also uses a high share of posted workers. Dalla Pellegrina & Saraceno (2016), using E101 certificates (in 2010 replaced by PDs A1) have also investigated the effect that posting of workers has had on different variables on domestic employment (measured by the share of employed individuals on total labour force); on hourly labour costs in industry and services; and on labour productivity of sending and receiving countries labour markets during the period Acknowledging the data limitations, they conclude that in an aggregate level (data from 27 EU countries) no significant effects are found on the sending country labour market variables. As regards receiving country labour market variables, they find that there is a non-significant relationship between postings and receiving country employment rate (indicating that posted workers might not be replacing local workers) and the inflow of posted workers actually increases labour costs and leads to higher labour productivity (Dalla Pellegrina & Saraceno 2016). Although the database used has limitations, this study indicates that posting of workers can in general have positive effects for the labour markets of receiving countries. However, as evidenced by studies discussed in the following, the effects can be different for different sectors, countries and groups of workers, and there are also fraudulent posting practices that official data might not cover. Based on the LIMOSA database, De Wispelaere & Pacolet (2017: 12) estimate that posting in the Belgian construction sector has to a certain extent resulted in displacement of local labour, 15

16 especially in the Construction of buildings, development of building projects and Plastering sub-sectors. Arnholtz and Hansen (2013) also point out that if migrant/posted workers are segmented into specific sectors and jobs, then they might be experiencing rather poor working conditions, without these having a significant impact on the overall labour market situation or the working conditions of natives (Arnholtz & Hansen 2013). All in all, although intra-eu posting numbers are relatively small, the impact of posting is important for the EU political economy (Bernaciak, PROMO presentation 2017). 16

17 5. The impact of European regulations of posting on different national systems and national responses to EU regulations The EU s regulatory framework for posted work is similar in each country, but the impact is different from one country and one industry to another. This is because the EU s harmonized framework interacts with national industrial relations systems which are not at all harmonized. From the perspective of worker protection, very different outcomes can result. In particular, the legal details of wage and other employment conditions setting systems can leave posted workers fairly well protected, or with few legal rights and very little recourse in a given situation. Rules and regulations applying to the posting of workers are shaped by a complex interplay of EU, home and host country, but also industry-specific regulatory environments (Lillie & Wagner 2015) and the European Court of Justice s decisions have bought about legal ambiguity that enables to a certain degree divergent national responses to the case law (Blauberger 2014). This section gives an overview of the impact of EU s regulatory framework for posted work on different national contexts and examines the national/social partner responses to the changing regulatory framework. Most research has focused on the impact of posting regulations on EU-15 (especially the Nordic countries, Germany, and the Netherlands) as the main host countries for posted workers from CEE and not much has been written about the impact of posting regulations on Central and Eastern Europe. Bosch and Weinkopf (2013) have analysed the impact of European regulations of posting on national wage systems. The main question is whether foreign service providers are able to provide cheaper services (by paying lower wages) than the local ones. They conclude The most extensive wage regulation systems for posted work that especially vulnerable have been the voluntarist wage setting are in countries where generally binding industry-specific systems, but they also add that no collective agreements that cover most of the economy exist, wage setting system is totally resistant to the transnational as in those systems foreign providers must follow the posting arrangements and EU s (minimum) provisions stipulated in the agreements. regulations that accompany these. The most successful are countries where generally binding industryspecific collective agreements that cover most of the economy exist, as in those systems foreign service providers also have to follow the (minimum) provisions stipulated in the agreements. These countries include Belgium, France and the Netherlands where there exist both national minimum wage and also collectively agreed minimum wages for different sectors. The situation is more difficult for systems with weaker trade unions and for countries where extension of collective agreements is not a common practice. In the United Kingdom (UK) (and most CEE counties), where trade unions are usually not able to secure sectoral collective agreements, posted workers are protected only by the existing (low) statutory minimum wage, that might protect them from extreme violations, but that keeps their wages considerable lower than the sectoral average. The situation has also been difficult for the voluntarist wage systems of Scandinavian countries where statutory minimum wages or generally applicable collective agreements do not exist (Bosch & Weinkopf 2013). Countries like France, the Netherlands and Belgium, where posted workers are covered by the national minimum wage and in most sectors also by the generally applicable collective agreements, can be considered rather successful in countering foreign wage-based competition (Bosch & Weinkopf 2013). 17

18 However, Houwerzijl (2010) argues that the Dutch adoption of the PWD was initially too minimalistic as regards ensuring its effectiveness and scope. Initially, it covered only the construction sector, but in 2005 the extension of hard core provisions in collective agreements were extended to posted workers in all industries. Since then, the government and social partner organisations have also started more actively monitoring and enforcing the rules for posted workers. Belgium and France have adopted rather stringent posting regimes (following the principle of equal pay and other conditions for equal work ), adjusting them as little as possible after the restrictive CJEU decisions (Dølvik, Eldring & Visser 2014). Enforcement problems and malpractices, however, have still been reported even in systems that in theory should be rather effective in securing the basic rights of posted workers (see e.g. Berntsen 2015a; Dølvik, Eldring & Visser 2014, section 6). In Belgium, in order to enhance the controllability of legal provision of services, since 2007 all foreign undertakings have to notify about their activities and about using posted workers through the LIMOSA system (Cremers et al. 2007). All people who want to perform a temporary economic activity have to register online before they start the activity. This kind of extensive information collection about posted workers is rather unique and provides probably the most accurate data source about postings. Belgium also had to reduce the amount of information they collected initially because according to the CJEU they restricted the free movement of services (Mussche et al. 2016). In Austria the dominant way to regulate employment relations is through generally applicable collective agreements that cover a great part of the economy, and thus most posted workers are covered as well. Posted employees are entitled to at least the amount of remuneration ( Mindestentgelt ) (including overtime, special payments, other allowances) that is set by legally binding collective agreements as well as in some industries by ordinance or statute. Additional provisions apply for posted construction workers. 12 However, enforcing the compliance with the agreements has deemed to be problematic in companies where labour representation channels do not exist, as is generally the case with foreign service providers. Both unions and the main employers association, the Economic Chamber of Austria, were concerned about the social dumping by foreign service providers and they agreed on the measures to improve the enforcement possibilities, like more inspections on worksites, a duty to present pay documents in German, and fines for firms who underpay their workforce. These measures were enacted by the government in 2011 as an Act against Wage and Social Dumping. The Act has been amended in 2015 and 2017, clarifying minimum remuneration, competencies of different national authorities, the explicit inclusion of cross-border transport services into the reach of posting regulations as well as foreseeing higher fines in case of wage and social dumping (Krings 2016; Gagawczuk 2016). In addition, a web-based information platform has been launched providing information in seven languages (German, English, Slovakian, Polish, Hungarian, Slovenian, and Czech) about rights and duties of posted workers and posting companies. 13 The Swiss labour market also became re-regulated after the labour market openings to the labour migration/service mobility from the EU in 2000 and As there is no statutory minimum wage and state s intervention in the regulation of employment conditions has been rather limited, generally binding sectoral level collective agreements are the main way posted workers labour conditions are regulated. The number of collective agreements extended through erga omnes principle has increased considerably, and the number of workers covered by these agreements has increased as well (Afonso 2016). Posting of workers is subject to compulsory notification and companies that post workers have to prove that they meet Swiss minimum applicable employment conditions (Afonso 2012: 722-3). There are still